Wisconsin Pledges $340 Million To Five PE Funds

The $83 billion State of Wisconsin Investment Board logged five private equity commitments totaling $340 million in the third quarter, according the system’s latest investment committee report. Three of the five commitments, about two-thirds of the total, were to funds with a European or Asian focus.

Wisconsin’s pension authority manages about $6 billion in private equity and private debt capital, about 8 percent of its main fund’s assets. That matches the system’s target.

The largest commitment was a $100 million pledge to the latest fund from Advent International, Advent International Global Private Equity Partners VII LP, which focuses mainly on North America and Western European buyouts. The fund closed in November, having raised $10.8 billion, making it the largest buyout fund raised entirely after the financial crisis began in late 2008.

Advent Fund VII was on a fundraising tear this year, having secured commitments of $450 million from the California Public Employees’ Retirement System, $400 million from the Washington State Investment Board, $200 million each from the Minnesota Board of Investment and the Massachusetts Pension Reserves Investment Management Board, $150 million from the Illinois Teachers Retirement System, and $100 million each from the Texas Employees’ Retirement System and the Tennessee Consolidated Retirement System. More than a half dozen other major pensions committed less than $100 million to the fund. The fund has already made one significant investment, purchasing the holding company that makes Simmons and Serta mattresses from Ares Management and the Ontario Teachers’ Pension Plan.

Advent’s prior fund, the 2008-vintage Fund VI, was returning a net IRR of 12 percent and a 1.2x return multiple, according to June 2012 data from the Washington State Investment Board.

A second commitment, worth $75 million, was made to a European distressed debt fund from Apollo Global Management. The fund, Apollo European Principal Finance Fund II LP, is targeting up to $3.3 billion and has secured $200 million from the Pennsylvania Public School Employees’ Retirement System, $50 million each from the Louisiana Teachers’ Retirement System and the Louisiana State Employees’ Retirement System, and $25 million from the San Francisco Employees’ Retirement System.

The previous fund in the series, the 2008-vintage Apollo European Principal Finance Fund LP, raised $1.9 billion. According to CalPERS data from March 2012, that fund was returning a net IRR of 4 percent and had a 1.1x return multiple.

A third commitment with an overseas focus was a $40 million pledge to FountainVest China Growth Capital Fund II LP, a China-focused growth capital fund from FountainVest Partners, which is based in Hong Kong. The fund is reportedly seeking to raise $1.25 billion. So far this year, Fund II has garnered commitments of $150 million from the Washington State Investment Board and $50 million from the San Diego County Employees Retirement System.

The 2008-vintage debut fund from FountainVest was returning a net IRR of 7 percent along with a 1.1x return multiple, according to June 2012 data from the Washington State Investment Board.

Wisconsin made a $75 million commitment to the newest fund from Minnesota-based Wayzata Investment Partners, the Wayzata Opportunities Fund III LP, a mid-market buyout and distressed debt fund. The fund, which has a $2.5 billion target, has so far received $150 million commitments from both the Minnesota Board of Investment and the Massachusetts Pension Reserves Investment Management Board. Other commitments to the fund include $100 million from the Los Angeles County Employees Retirement Association, $75 million from the Texas County & District Retirement System and $50 million from the Kentucky Retirement System.

Wayzata’s previous fund, the 2008-vintage Fund II, was producing an IRR of 16 percent along with a 2x investment multiple, according to March 2012 data from CalPERS.

The final commitment from Wisconsin was $50 million to the latest effort from Los Angeles-based Clearlake Capital Partners, Clearlake Capital Partners Fund III LP. The fund, which will focus on mid-market buyouts and special situations, is targeting $600 million.

Already, the fund has received commitments of $75 million from the Los Angeles County Employees Retirement Association, $50 million each from the New York State Teachers’ Retirement System and the Illinois Teachers’ Retirement System, $40 million each from the Connecticut Retirement Plans and Trust Funds and the West Virginia Investment Management Board.

It’s easy to see the reason behind the huge interest in this fund. The firm’s prior fund, the 2010 vintage Fund II, has so far returned a net IRR of 46 percent along and a return multiple of 1.5x, according to March 2012 data from CalPERS.

Gregory Roth is a senior editor at Buyouts Magazine. Any opinions expressed here are entirely his own. Follow him on Twitter @RothReuters. Follow Buyouts tweets @Buyouts.